Nielsen; Secretary, Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2002] AATA 807

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2002/337

GENERAL ADMINISTRATIVE DIVISION       )
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Applicant
           And    KNUD NIELSEN
  Respondent

DECISION

Tribunal Mr M J Sassella, Senior Member

Date16 September 2002
PlaceSydney

Decision      The tribunal affirms the decision under review, albeit for reasons different from those of the Social Security Appeals Tribunal.
   [SGD] M J SASSELLA
  Senior Member
CATCHWORDS
SOCIAL SECURITY –Newstart Allowance – whether workers' compensation settlement proceeds were compensation – settlement included no amount in relation to lost earnings or lost capacity to earn – settlement held not to be compensation – Secretary had no power to issue notice requiring payment of amount from compensation – compensation debt not validly raised

Social Security Act 1991 ss 17(2), 1184(1), (3), (4),

Workers Compensation Act 1987 (NSW) ss 66, 67

REASONS FOR DECISION

16 September 2002 Mr M J Sassella, Senior Member

THE APPLICATION

This is an application to the Administrative Appeals Tribunal ("the tribunal") by the Secretary, Department of Family and Community Services ("the applicant") for review of a decision of the Social Security Appeals Tribunal ("the SSAT") dated 11 February 2002 (T2) in which the SSAT set aside a decision of Centrelink authorised review officer ("ARO") dated 28 November 2001 (T17). The ARO had decided that a compensation debt of $2,032.98 was recoverable from Mr Knud Nielsen ("the respondent") and that there were no special circumstances such as would permit Mr Nielsen's compensation payment to be disregarded by the applicant. The SSAT had decided that the whole amount of the respondent's compensation payment was to be disregarded and the money recovered by Centrelink from Mr Nielsen was to be refunded because of special circumstances in Mr Nielsen's case.
THE HEARING
The tribunal convened a hearing in this matter in Sydney on 31 July 2002. The applicant was represented by Mr G Lozynsky from the Centrelink Advocacy and Administrative Law Team. The respondent represented himself with assistance from his son, Mr C Nielsen. Mr Nielsen, the respondent, gave evidence under oath. The tribunal took into evidence the following documents:

Exhibit TD1 – Section 37 Statement and associated documents (exhibits T1 – T19) provided by the applicant.
Exhibit A1 – Applicant's statement of facts and contentions, 11 July 2002.

FINDINGS ON MATERIAL QUESTIONS OF FACT WITH REFERENCE TO THE EVIDENCE AND OTHER MATERIAL IN SUPPORT OF THOSE FINDINGS

Mr Nielsen was granted Newstart Allowance on 15 September 1995 (ex A1). On 10 March 1996 he was working as a taxi driver when he was assaulted and injured (T4). He customarily earned around $200 a week from this work (T4/27). His injuries involved facial disfigurement (T4/27). A list of medical issues associated with Mr Nielsen's eventual workers' compensation claim included items for facial x-rays, dental treatment, chest pain investigations, references to a haematoma on the left cheek, diminished sensation on the left of the face and an indentation to the left cheek (T4/37). Mr Nielsen continued to receive Newstart Allowance.
Mr Nielsen was in the habit of driving taxis on weekends and he told the tribunal that he drove over the next two weekends following the assault, albeit for a different owner.
On 23 May 1997 Mr Nielsen surrendered his Newstart Allowance (T2).
On 5 March 1999 (ex A1) Mr Nielsen lodged a workers' compensation claim under NSW State laws (T4/25-31).
On 28 April 2000 Mr Nielsen again claimed Newstart Allowance (T2). On 18 August 2000 the Newstart Allowance was cancelled because Mr Nielsen returned to work (ex A1). On 20 April 2001 Mr Nielsen was again granted Newstart Allowance, however this was cancelled on 31 August 2001 when he did not return a Newstart continuance form (ex A1).
On 2 October 2001 the Compensation Court of NSW approved a settlement of Mr Nielsen's claim by way of commutation of his entitlements in the sum of $20,000 (T4/23).
On 4 October 2001 Mr Nielsen's solicitors wrote to Centrelink informing it of the outcome of Mr Nielsen's compensation action (T4). On 5 October 2001 a Centrelink computer file note recorded the information from Mr Nielsen's solicitors and a later entry on the same page indicated that on 10 October the Workcover Authority confirmed details of the settlement. Workcover also confirmed the date of the incident and that no weekly compensation payments had been made to Mr Nielsen (T5).
On 15 October 2001 Centrelink issued a notice to Mr Nielsen's workers' compensation insurer, Workcover NSW, requiring it to pay Centrelink $2,032.98 from Mr Nielsen's settlement moneys (T9). This was in accordance with s 1184 of the Social Security Act 1991 ("the Act"):
Secretary may send recovery notice to compensation payer or insurer
1184.(1) If:
(a)       a person (the compensation payer):
(i)        is liable to pay compensation to a person (a claimant); or
(ii)       where the compensation payer is an authority of a State or Territory, has determined that a payment by way of compensation is to be made to a claimant; and
(b)       the claimant has received a compensation affected payment in relation to a day or days in the periodic payments period or the lump sum preclusion period, as the case may be;
the Secretary may give written notice to the compensation payer that the Secretary proposes to recover from the compensation payer the amount specified in the notice.
…
1184.(3) If a compensation payer or insurer is given notice under subsection (1) or (2), as the case may be, the compensation payer or insurer is liable to pay to the Commonwealth the amount specified in the notice.
1184.(4) The amount to be specified in the notice is the recoverable amount under section 1184A.
…
On 15 October 2001 Centrelink also issued notices to Mr Nielsen and his solicitor advising them of the preclusion period, running from 10 March to 6 July 1996, and of the recovery of the $2,032.98 (T10, T11). Newstart Allowance had been paid to Mr Nielsen during the period when he was to have been precluded from payment. This was the set of decisions later affirmed by an ARO and set aside by the SSAT.
At the hearing Mr Nielsen said that the settlement contained no amount in respect of any claim for lost earnings or lost capacity to earn. As noted above, he was able to work over the weekends following the assault. The tribunal asked Mr Lozynsky to identify where in the documents before the tribunal there was any reference to the compensation settlement including an amount for lost earnings or lost capacity to earn.
There were several possible references. The first was in Mr Nielsen's solicitor's letter dated 4 October 2001 to Centrelink (T4) where the writer said that in the commutation approval hearing Commissioner Hunt made a declaration that any economic loss suffered by Mr Nielsen was in the period from 10 March to 25 March 1996 "when he returned to work". It was noted that "[h]e worked only weekends so the actual hours he missed were in the realm of two or three weekends". It was unclear whether this was part of Commissioner Hunt's declaration or editorial comment by the letter writer. The letter proceeded to say that the most significant part of Mr Nielsen's entitlements was in relation to medical treatment expenses in the future, including $5,500 for future dental remedial work. The letter writer suggested that Mr Nielsen's "actual compensation for economic loss, if any, [was] for a few hundred dollars" (T4/24).
The ARO spoke to Workcover on 28 November 2001 and ascertained that the settlement was a commutation which included "s 66" and "s 67" and "wages" (T16/63). The references to ss 66 and 67 were to provisions of the NSW Workers Compensation Act 1987 ("the NSW Act"). A s 66 payment is in respect of permanent impairment, which is not compensation for lost earnings or lost capacity to earn. A s 67 payment is compensation for pain and suffering, again not compensation for lost earnings or lost capacity to earn.
The tribunal noted the foundation provision in the Act relating to the meaning of compensation and, flowing from that, compensation recovery and compensation debts:
Compensation
17.(2) Subject to subsection (2B), for the purposes of this Act, compensation means:
(a)       a payment of damages; or
(b)       a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c)       a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d)       any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury. (Tribunal's emphasis)
The tribunal takes this to mean that, where no part of the payment or payments is referable to the recipient's lost earnings or lost capacity to earn, the payment or payments are not "compensation" in accordance with the Act.
The tribunal has considered the material that tends to suggest that Mr Nielsen did not in fact claim for lost earnings or lost capacity to earn when claiming against Workcover NSW, therefore suggesting that there was no such element in the settlement figure.
In the application to the Compensation Court of NSW for determination of liability (T4/25) the particulars of compensation claimed read:
"(a) s 66 lump sum $8,000 in respect of 10% severe facial disfigurement.
(b) s 60 expenses."
The standard form of particulars on which that information appeared also contained an invitation to declare the claimant's current weekly wage rate, average weekly earnings and actual weekly earnings during periods claimed. This was completed so as to show that Mr Nielsen earns $200 a week and earned nil in the period 11 to 25 March 1996. However, this was erroneous as Mr Nielsen lost no incopme. It was not, in any event, included as part of the "compensation claimed".
In the letter to Centrelink from Mr Nielsen's solicitors dated 4 October 2001 (T4) the writer stated that the claim was for "medical treatment expenses and a lump sum for facial disfigurement". This is consistent with the particulars of claim.
On 26 March 2001 Workcover NSW wrote to Mr Nielsen's solicitor seeking further and better particulars (T4/32). Amongst these was a request for specification of the sections of the NSW Act on which Mr Nielsen intended to rely in his claim and a request for further particulars of all amounts being claimed. The solicitors responded on 28 May 2001 (T4/36). That letter referred to the application for determination for identification of the relevant sections of the NSW Act (ie ss 60 and 66, as identified above in paragraph 18). For the amounts being claimed the response told Workcover that s 66 money was sought "as per Application" and s 60 moneys were:

$5,500 – Dr L Sutherland for dental repair work.
$244 – Dr Deutsch for dental treatments.
The figure (not then known) on the Medicare notice of charge.
$85 – Dr Nettle for one consultation.

This totalled $5,829 plus any HIC charge or any increase in Dr Sutherland's fees.

In response to two other requests about Mr Nielsen's income, the solicitors responded "No wage claim is made".
The tribunal considers that Mr Nielsen has strong grounds to argue that the commutation settlement included no component for lost earnings or lost capacity to earn. In the tribunal's view, the contraindications can each be explained.

The solicitor's letter contained references to Mr Nielsen's loss of earnings situation (see paragraph 13 above). This letter was confusing and internally inconsistent. It is not surprising that Centrelink read it as suggesting that Mr Nielsen's settlement covered lost earnings. At one point it stated that the only claims were for medical treatment and a lump sum for facial disfigurement. It then quoted Commissioner Hunt asserting that the settlement covered matters including "economic loss suffered … in the period 10 March 1996 to about 25 March 1996". The writer then advised that the compensation for economic loss, "if any", was for a few hundred dollars only. It seems to the tribunal that the writer was attempting to say that the only claims related to matters other than lost earnings or lost capacity to earn, but that, even if lost earnings or lost earning capacity were included, that represented only a small part of the total.
The tribunal considers that that part of Commissioner Hunt's statement as to "any economic loss" was, more probably than not, part of a standard formulation used in these cases regardless of whether claims for lost earnings or lost capacity to earn have been raised in the individual case. The tribunal would be uncomfortable accepting a hearsay report of Commissioner Hunt's comments as sufficient to displace all of the other documentary material corroborating Mr Nielsen's evidence that he made no claim for lost earnings or lost earning capacity.
The tribunal makes similar observations about the Workcover advice to the ARO on 28 November 2001 (see paragraph 14 above). The tribunal considers it more likely than not that the Workcover officer imparting the information resorted to a normal description of the matters incorporated in a settlement.

The tribunal finds that it is not satisfied that the payment made to Mr Nielsen as an incidence of the settlement of his claim on 2 October 2001 involved a payment that was made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
That finding has various effects:
(a)There can be no "compensation part" of a lump sum compensation payment in accordance with s 17(3) of the Act because there was no "compensation" paid to Mr Nielsen in accordance with the definition in s 17(2) of the Act.
(b)There was no capacity in the Secretary to send a recovery notice under s 1184(1) of the Act to Workcover.
(c)In accordance with s 1184(3) there was no liability on Workcover to pay the Commonwealth any amount specified in the notice sent in accordance with s 1184(1).
(d)Mr Nielsen is not liable to pay any amount resulting from his receipt of compensation, as might otherwise be the case in accordance with Subdivision B of Division 4 of Part 3.14 of the Act.
These findings make it unnecessary to consider s 1184K of the Act, the section permitting a decision-maker to regard the whole or part of a compensation payment as not having been made or not liable to be made.
CONCLUSION
The tribunal has decided that Mr Nielsen's compensation was not wholly or partly in respect of lost earnings or lost capacity to earn. This means that Centrelink was not entitled to obtain the amount of $2,032.98 that it intercepted from Workcover. Mr Nielsen is therefore entitled to receive from Centrelink the amount of $2,032.98 currently held by Centrelink.
DECISION
The tribunal affirms the decision under review, albeit for reasons different from those of the Social Security Appeals Tribunal.
I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M J Sassella, Senior Member
Signed:         .....................................................................................
  Associate
Date of Hearing  31 July 2002
Date of Decision  16 September 2002
Advocate for the applicant       Mr C Nielsen
Advocate for the respondent    Mr G Lozynsky, Centrelink Advocacy and Administrative Law Team

[2002] AATA 807

16 September 2002

Key Legal Topics

Areas of Law

Social Security Law

Legal Concepts

Social Security Act 1991

Compensation Debt

Entitlement to Benefits